For the eighth month in a row, the PMI in July remains over 50 points

DNHN - New orders increased for the ninth straight month in July, albeit at the slowest rate since April.

The Purchasing Managers' Index (PMI) of Vietnam's manufacturing industry in July remained above 50 points for the tenth consecutive month, showing continued strong business conditions. However, the measure improved just somewhat, rising to 51.2 points from 54 points in June.

For the eleventh month in a row, new orders increased, although at the slowest rate since April. Meanwhile, the number of new export orders climbed rapidly, outpacing the overall number of new orders.

The volume of new orders continued to rise in July, encouraging manufacturers to enhance production. For the fourth month in a row, output grew. However, the pace of growth is moderate and slowest during the present-up phase, when there are indicators of declining demand, transportation issues, and pricing pressure.

Nonetheless, there are hints that pricing and supply pressures have eased as the third quarter begins.

In terms of pricing, the pace of rising input costs dropped and was the slowest since October 2020, when prices of several input products declined in the international market.

However, the gain this time is still more than the index's average, as oil, gas, and transportation expenses rise. Similarly, production prices continued to rise, albeit at a slower and somewhat higher pace.

Supplier lead times remained unchanged, with lead time extensions falling for the second month in a row to their lowest level in 22 months. Where delivery times continue to be lengthy, the cause is linked to shipping issues and increased transportation expenses.

Manufacturers have increased their staff for the fourth consecutive month to satisfy production demands. Job growth was robust, albeit it fell from a three-and-a-half-year high in June. Meanwhile, backlogs remained steady after dropping the previous month.

Firms boosted buying activities in July in addition to recruiting more staff owing to an increase in the number of new orders and companies wishing to expand inventory. Attempts to boost purchases have been futile, with pre-production stocks plummeting at the quickest pace in over a year.

Finished goods inventories declined as well, for the fifth consecutive month and at a quicker pace than in June. Some businesses have cut stocks as new orders have slowed, while others have increased them. Another firm said that exporting items was simpler.

Manufacturers are confident that production will rise during the next 12 months. The upbeat mood reflects expectations for ongoing improvement in consumer demand, stable market circumstances, new product development, and corporate investment. Almost 58 per cent of poll respondents are bullish on the production forecast, while 11 per cent are bearish.

PV